A leading shareholder in the Russian oil giant Yukos yesterday offered the Kremlin controlling shares in the firm, worth some £8bn, if its chief executive, Mikhail Khodorkovsky, was freed from jail.

Leonid Nevzlin, wanted for extradition to Russia on tax evasion charges, said his three Yukos associates, including Mr Khodorkovsky, were being held hostage while the Kremlin tried to extort the company from its shareholders.

"We are offering a choice - free the hostages and we will be ready to talk about ceding the controlling stake," he told Reuters from Israel.

Mr Khodorkovsky, CEO of Yukos until his arrest at gunpoint in October, owns some 9.5% of the company.

Russian prosecutors froze Yukos shares in October as insurance against recovering the taxes that they said Mr Khodorkovsky owed.

Mr Nevzlin told the Bloomberg news service: "We'll do anything to get our buddies out of jail. There can be only one guarantee - the release first, our exit [from the company] second."

A source in the prosecutor general's office told Interfax: "No one is going to react to a proposal that is absurd from both a legal and a moral point of view."

Alexander Dobrovinsky, a leading Moscow lawyer, said there was no legal context for such a deal.

Meanwhile, Mr Khodorkovsky will stay in jail until March 25, when proceedings start.

Analysts doubt whether the Russian legal system is mature enough to try someone with a sharp defence team for complex white-collar crimes.

The finance minister, Alexei Kudrin, said yesterday the Yukos case was necessary to clarify "the rules of the game" between big business and the authorities.